Jan. 29 (Bloomberg) -- Confidence among U.S. consumers
declined more than forecast in January, reaching the lowest
level in more than a year as higher payroll taxes took a bigger
bite out of Americans’ paychecks.

The Conference Board’s index decreased to 58.6, the weakest
since November 2011, from a revised 66.7 in December, figures
from the New York-based private research group showed today. The
January reading was lower than the most pessimistic forecast in
a Bloomberg survey, which had a median estimate of 64.

The drop in confidence coincides with a two percentage-point increase in the payroll tax used to fund Social Security,
a hurdle for consumers after a projected pickup in spending in
the fourth quarter. The outlook for employment prospects and
incomes also deteriorated this month, today’s data showed.

“The thing that’s particularly troubling is the sizable
decline in expectations,” said Guy Lebas, chief fixed-income
strategist at Janney Montgomery Scott LLC in Philadelphia, who
projected a reading of 61.6. “As those expectations
deteriorate, it doesn’t bode particularly well for day-to-day
consumer spending.”

The 8.1-point slump in the gauge of sentiment from a month
earlier was the biggest since August 2011. Estimates of the 73
economists surveyed by Bloomberg ranged from 59 to 70. The
measure averaged 53.7 in the recession that ended in June 2009.

Stocks were little changed after the figures as investors
watched earnings reports. The Standard & Poor’s 500 Index rose
0.1 percent to 1,501.87 at 10:21 a.m. in New York.

Home Prices

Another report today showed property values increased in
November by the most since August 2006. The S&P/Case-Shiller
index of home prices in 20 U.S. cities climbed 5.5 percent from
November 2011, after advancing 4.2 percent in the year to
October.

The Conference Board’s gauge of present conditions fell to
a three-month low of 57.3 in January from 64.6. The measure of
expectations for the next six months slumped to 59.5, the lowest
since October 2011, from 68.1.

The share of consumers expecting more jobs to become
available in the next six months dropped to 14.3 percent in
January, the lowest since December 2011, from 17.9 percent the
previous month.

Fewer consumers anticipate a pickup in their incomes as
well. The share expecting an increase in the next six months
fell to 13.6 percent, the lowest since October 2011.

Labor Market

The number of respondents who said jobs are currently
plentiful declined to 8.6 percent in January from 10.8 percent.
Those who said jobs are hard to get rose to 37.7 percent from
36.1 percent.

Increased pessimism about the labor market may be seeping
into purchase plans. The share of Americans planning to buy a
car in the next six months fell to 10.1 percent, the lowest
since April 2012.

The share of households expecting interest rates to climb
in the next year increased to 49.9 percent in January, the
highest since August 2011.

Today’s figures mirror other measures of consumer
confidence. The Bloomberg Consumer Comfort Index dropped in the
week ended Jan. 20 to the lowest level since early October as
Americans’ concerns about the economy mounted.

The Thomson Reuters/University of Michigan preliminary
index of consumer sentiment dropped in January to its lowest
point since December 2011.

These reports also showed that a decrease in take-home pay
from the increase in payroll taxes is weighing on attitudes.
Americans earning $50,000 a year will take home about $80 less a
month after the tax used to pay for Social Security benefits
went up to 6.2 percent from 4.2 percent.

Budget Debate

While lawmakers avoided broad-based increases in income
taxes, Congress is now debating how best to reduce the nation’s
budget deficit. Automatic spending cuts are slated to go into
effect March 1.

Walgreen Co., the largest U.S. drugstore chain, sees
customers who have grown more value conscious.

“Many of our customers are concerned about long-term
employment,” Kermit Crawford, president of the company’s
pharmacy, health and wellness business, said at a health-care
conference on Jan. 7. “They’re concerned about issues such as
Medicare and Social Security. They’re concerned about the debt
issues. It’s changing the way they think about value. It’s
changing the way they shop.”

Employment gains are helping sustain demand. Employers
added 155,000 workers in December, according to Labor Department
data. For all of 2012, the economy created 1.84 million jobs,
matching the gain in 2011. It’s the best back-to-back reading
since 2005-2006.

Consumers are also paying less at the gas pump. The average
price of a gallon of gas yesterday was $3.36, down from a recent
high of $3.87 in September, according to data from AAA, the
biggest U.S. motoring organization.